Tuesday, June 07, 2011
8:56:05 PM EDT

Bear-Flag Pattern

by
James Brown

The market is trending lower but there are a few pockets of strength. Here's a list of bullish and bearish candidates that caught my eye.

DTV - the close under $48 and its 50-dma looks like a new entry point for bearish positions. Or you could wait for a bounce/failed rally in the $48.50-49.00 zone.

EXPD - the stock is breaking down but I would wait for a bounce or failed rally near $50 or its 200-dma before considering new bearish positions.

ETN - The breakdown under $49 and its 200-dma looks like a new entry point for bearish positions.

JCI - JCI has a similar pattern with a breakdown under technical support at the 200-dma.

SLE - The recent bounce has failed near $19.00. This could be a bearish entry point. A potential target could be the 17.25-17.00 area.

DNR - Wait for a breakdown under its 200-dma before considering bearish positions.

TXT - The oversold bounce failed at prior resistance near $22.00.

ZION - Financial stocks have been sinking to new lows and ZION just broke multiple layers of support.

LNC - Traders may want to wait for a bounce or failed rally near resistance at $28.00 or its 200-dma before considering bearish positions.

FTI - Wait for a breakdown under its 200-dma before considering bearish positions.

CVC - This cable TV stock was showing relative strength most of the session. I'd wait to see if shares bounce from their 100-dma before considering bullish positions.

NANO - Shares of NANO were showing relative strength today. The stock is bouncing from its 200-dma and NANO has not broken its long-term trend of higher lows. I was very tempted to buy the stock now. Unfortunately shares might gap open higher tomorrow. After the closing bell S&P announced they were adding NANO to the small cap 600 index. I would definitely keep NANO on your watch list for a possible bullish trade.

Why We Like It:
Investors are growing more and more worried about a slow down in the economy and we're seeing that sentiment in new weakness for MAR. Shares just broke support at its 50-dma. Plus the stock is breaking down from what appears to be a bear-flag pattern. I am suggesting bearish positions now and we'll start with a stop loss at $37.55. The April lows near $33.50 might offer some support but we're aiming for the $30.00 area. I'll set our exit target at $30.50. FYI: The Point & Figure chart for MAR is bearish with a $25 target.

Suggested Position: Short MAR stock @ current levels

- or -

buy the July $33 PUT (MAR1116S33) current ask $0.60

Annotated chart:

Entry on June 8 at $xx.xx
Earnings Date 07/13/11 (unconfirmed)
Average Daily Volume: 3.7 million
Listed on June 7th, 2011